2021 (8) TMI 815 - AT - Income Tax

ITAT Upholds Income Estimation Decision with Emphasis on Documentation and Accounting Practices

Sri Bhaskar Contractors Company Versus Asst. Commissioner of Income Tax Circle-3 (1) Vijayawada

The ITAT upheld the estimation of income at 12.5% on main contracts and 5% on sub contracts before deductions for Assessment Year 2008-09 and 2012-13. The ... Rectification of mistake u/s 254 - estimation of income @12.5% - rejection of books of accounts - HELD THAT:- The rate of estimation of income depends on the facts and circumstances of each case and the same cannot be applied uniformly in all the case. In the instant case, after considering the various issues, ITAT viewed that estimation of income @12.5% is reasonable. ITAT Hyderabad Bench in KNR Constructions [2012 (10) TMI 1046 - ITAT HYDERABAD] and confirmed the estimation of income @12.5%. Tribunal has taken consistent view for estimation of income ranging from 9% to 12.5% depending on the facts and merits of each case. After having considered the facts and merits of the case of the assessee, the Tribunal has decided the appeal of the assessee estimating the income @12.5% before depreciation and interest on remuneration paid to the partners. The assessee did not specifically mention any defect or mistake in the Tribunal order and what the assessee is requesting through the M.A. is revision of the order passed by the ITAT which is not permissible u/s 254(2). Since, we have decided the appeal taking into consideration of all the issues, we, find no mistake in the order of the ITAT and there is no reason to interfere with the order already passed. Hence, the M.As. filed by the assessee are dismissed. Issues:Assessment Year 2008-09 & 2012-13 - Estimation of income @12.5% on main contracts and 5% on sub contracts before depreciation, interest, and remuneration to partners.Analysis:The assessee filed Miscellaneous Applications (M.A.) against the ITAT order for A.Y. 2008-09 and 2012-13. The ITAT partially allowed the appeals of the revenue and cross objections of the assessee. The M.A. requested to reconsider the estimation of income at a lesser percentage. The assessee argued for a reduction in income estimation to 11% instead of 12.5% for justice. The ITAT had directed estimation of income @12.5% on main contracts and 5% on sub contracts before deductions. The Ld.DR argued no error in the ITAT order. The Tribunal noted the lack of proper books of accounts by the assessee and upheld the estimation of income @12.5%. The ITAT held that rectification of the order is not permissible under section 254(2) of the Act, citing precedents from the Delhi High Court and ITAT Mumbai. The M.A.s filed by the assessee were dismissed as no mistake was found in the ITAT order.The Tribunal considered various issues, including deductions and payments made by the assessee. The ITAT found the estimation of income @12.5% reasonable based on facts and merits of the case. The ITAT cited consistent views from previous cases for income estimation. The assessee's request for revision of the ITAT order was deemed impermissible under section 254(2) of the Act. The ITAT emphasized the limited scope of rectification under section 254(2), highlighting that rectification is only for apparent mistakes on record. The ITAT dismissed the M.A.s as no errors were found in the ITAT order. The judgment reaffirmed the decision to estimate income @12.5% before deductions, emphasizing the importance of maintaining proper books of accounts for accurate income determination.The ITAT detailed the assessee's failure to produce proper vouchers and bills, leading to the rejection of books of accounts and income estimation. The Tribunal highlighted discrepancies in the assessee's accounting practices and lack of evidence for various payments. The judgment emphasized the importance of maintaining accurate records for tax assessment purposes. The ITAT's decision to estimate income @12.5% was based on the lack of supporting documentation and discrepancies in the assessee's submissions. The judgment underscored the need for proper documentation and upheld the estimation of income @12.5% before deductions. The M.A.s filed by the assessee were dismissed as the ITAT found no errors warranting a revision of the order.